Steichen v. Huffman CA4/1 ( 2022 )

Filed 9/19/22 Steichen v. Huffman CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
CHRISTINE STEICHEN, D079381
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2018-
00030963-CU-OR-CTL)
STANLEY HUFFMAN,
Defendant and Respondent.
APPEAL from an order of the Superior Court of San Diego County,
Eddie C. Sturgeon, Judge. Reversed and remanded with directions.
Law Office of Johanna S. Schiavoni, Johanna S. Schiavoni; Trails Law
Group, and Hillery M. Stones for Plaintiff and Appellant.
White & Amundson and Daniel M. White for Defendant and
Respondent.
Christine Steichen appeals from an order granting a motion to set aside
a default judgment against Stanley Huffman. She asserts the trial court’s
order constitutes an abuse of discretion because Huffman was not diligent in
seeking relief from the judgment. We agree. Accordingly, we reverse and
remand the matter to the trial court with directions to enter an order denying
the motion to set aside the default judgment and re-enter the default
judgment and writ of execution.
FACTUAL AND PROCEDURAL BACKGROUND
Steichen and Huffman were neighbors in Escondido, California. In
July 2017, Huffman was convicted of felony vandalism for poisoning
Steichen’s plants and trees over several years.
On June 21, 2018, less than a year after Huffman’s conviction, Steichen
filed suit, seeking injunctive relief and damages. On July 31, 2018, Huffman
was personally served with the summons, complaint, and supporting
documents at his address in California. The following day, Huffman moved
out of California to Reno, Nevada.
On August 6, 2018, Huffman sent a text message to his criminal
defense attorney, Justin Murphy, stating that he had been served with a
summons and asking Murphy to “call or text” him back. Murphy responded
the same day that he would reach back out to Huffman. Over the next
several weeks, Huffman sent Murphy three more texts asking about the
case’s status. Huffman finally spoke to Murphy on September 26, 2018. In
his declaration in support of his motion to set aside the later entered default
judgment, Huffman stated he also sent Murphy a $2,500 check for Murphy to
represent him in the case.
On November 29, 2018, Steichen filed her First Amended Complaint
(FAC) with a statement of damages. On December 22, 2018, Huffman was
personally served with the FAC and the statement of damages at his address
in Nevada. The same evening, Huffman texted Murphy and asked, “Am I
required to do anything?” Murphy replied on January 3, 2019, “You don’t
need to do anything.”
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On January 28, 2019, Huffman texted Murphy that he received an
application for entry of default that had been filed four days earlier. He also
texted Murphy, “I don’t know what form [sic] means. Did you get a copy?
Advise me what you need me to do.”
On Thursday, May 9, 2019, Huffman received an application for court
judgment and again texted Murphy. The next day, Murphy texted Huffman
back, “I haven’t gotten anything from [Steichen’s] attorney. ... I’ll call you
Monday. Nothing will change by then.” Huffman did not hear back from
Murphy on Monday. The following Friday, May 17, 2019, Huffman sent a
follow-up text message stating, “Justin, since I didn’t hear from you Mon.
Everything must be under control. Guess you received papers I received. ...
If you have any new info please contact me.”
Several weeks later, the trial court held a default prove-up hearing.
Huffman did not appear personally or through counsel. The court entered a
default judgment against Huffman and awarded Steichen $122,479.66 in
principle damages, $100,000 in punitive damages, $22,814.17 in attorney
fees, and $730.35 in prejudgment costs.
On November 28, 2019, Huffman received a notice of levy and a writ of
execution, the latter of which had been issued two weeks earlier. Huffman
texted Murphy the next day, stating, “I’m very concerned do I owe this.
please advise me what to do.” The following morning, Huffman texted
Murphy that he would send all the documents from the Sheriff to Murphy.
Huffman also texted Murphy a screenshot of a signed claim of exemption
form.
On December 3, 2019, Huffman followed up again, asking Murphy to
“[p]lease update me on what’s happening when you get a chance. I know you
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are busy.” Murphy texted back eight days later that “I’ve been looking into it.
I should understand what is going on by the end of the week.”
On December 19, 2019, Huffman received another notice of levy, this
one from Silvergate Bank. He texted Murphy, asking, “How can this
happen???? I have never heard anything from courts. ... Please call or text
me ASAP!!” Murphy responded the following day, asking Huffman to send
him the paperwork. After that text exchange, communications between
Murphy and Huffman ceased entirely.
Fifteen months later, on March 22, 2021, Huffman received the
application for foreign judgment, informing him that Steichen had moved to
domesticate her judgment in Nevada. One week later, Huffman retained new
counsel in California. On April 6, 2021, Huffman moved to set aside the
default judgment at the trial court. On May 14, 2021, the court heard oral
arguments from both parties and later granted Huffman’s motion to set aside
the judgment. Steichen timely appealed.
DISCUSSION
Steichen asserts the trial court abused its discretion in setting aside
the default judgment. To set aside a default judgment on equitable grounds,
the moving party must satisfy three elements: (1) a satisfactory excuse with
respect to the entry of default, (2) diligence upon discovery of default, and
(3) a meritorious case. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982
(Rappleyea).)
Steichen concedes that Huffman presented a satisfactory excuse based
on Murphy’s positive misconduct by failing to represent Huffman until
December 2019. Steichen argues, however, that after Murphy cut off
communication with Huffman, he failed to satisfy the required element of
diligence as a matter of law by not taking any action to set aside the default
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judgment for 15 months. Steichen also asserts Huffman failed to establish a
meritorious defense.
We agree with Steichen that because Huffman provided no evidence to
support a finding of diligence after December 2019, which was separately
required from Murphy’s misconduct, the trial court abused its discretion in
granting relief.
I
General Legal Standards
A trial court may set aside a default judgment either under its
statutory power within the first six months, or thereafter under its equitable
power. Code of Civil Procedure section 4731, subdivision (b), confers on the
trial court the statutory authority to relieve a party from a judgment taken
against him through “mistake, inadvertence, surprise or excusable neglect.”
Under this provision, the defaulted party must move “within a reasonable
time, in no case exceeding six months.” “The six-month period runs from
entry of default, not entry of judgment.” (Manson, Iver & York v.
Black (2009) 176 Cal.App.4th 36, 42.)
After the statutory period has expired, a trial court may still grant
relief from a default judgment on equitable grounds, even if statutory relief is
unavailable. (Weitz v. Yankosky (1966) 63 Cal.2d 849, 855 (Weitz).) “One
ground for equitable relief is extrinsic mistake—a term broadly applied when
circumstances extrinsic to the litigation have unfairly cost a party a hearing
on the merits.” (Rappleyea, supra, 8 Cal.4th at p. 981.) “Extrinsic mistake is
found … [in] cases involving negligence of a party’s attorney ….” (Kulchar v.
Kulchar (1969) 1 Cal.3d 467, 472.)
1 All further statutory references are to the Code of Civil Procedure
unless otherwise specified.
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“When a default judgment has been obtained, equitable relief may be
given only in exceptional circumstances. ‘[W]hen relief under section 473 is
available, there is a strong public policy in favor of granting relief and
allowing the requesting party his or her day in court. Beyond this period
there is a strong public policy in favor of the finality of judgments[.]’ ”
(Rappleyea, supra, 8 Cal.4th at pp. 981–982.)
To further this policy, the Supreme Court has adopted a stringent test
for equitable relief based on positive misconduct. (Rappleyea, supra, 8
Cal.4th at p. 982.) As stated, “ ‘[t]o set aside a judgment based upon extrinsic
mistake one must satisfy three elements. First, the defaulted party must
demonstrate that it has a meritorious case. Second, the party seeking to set
aside the default must articulate a satisfactory excuse for not presenting a
defense to the original action. Last, the moving party must demonstrate
diligence in seeking to set aside the default once … discovered.’ ” (Ibid.)
“ ‘A motion to set aside a default judgment is addressed to the sound
discretion of the trial court, and, in the absence of a clear showing of abuse of
discretion where the trial court grants the motion, the appellate court will not
disturb the order.’ ” (Aldrich v. San Fernando Valley Lumber Co. (1985) 170
Cal.App.3d 725, 736 (Aldrich).) “ ‘That discretion, ... “ ‘is not a capricious or
arbitrary discretion, but an impartial discretion, guided and controlled in its
exercise by fixed legal principles. It is not a mental discretion, to be
exercised ex gratia, but a legal discretion, to be exercised in conformity with
the spirit of the law and in a manner to subserve and not to impede or defeat
the ends of substantial justice.’ ” ’ ” (Id. at p. 737.)
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II
Satisfactory Excuse
In general, to obtain equitable relief based on mistake or inadvertence
of counsel, a party must demonstrate that “such mistake, inadvertence, or
general neglect was excusable ‘because the negligence of the attorney … is
imputed to his client and may not be offered by the latter as a basis for relief.’
[Citation.] The client’s redress for inexcusable neglect by counsel is, of
course, an action for malpractice.” (Carroll v. Abbott Laboratories, Inc. (1982)
32 Cal.3d 892, 898 (Carroll).)
“However, an exception to this general rule has developed. ‘[Excepted]
from the rule are those instances where the attorney’s neglect is of that
extreme degree amounting to positive misconduct, and the person seeking
relief is relatively free from negligence.’ ” (Carroll, supra, 32 Cal.3d at
p. 898.) The rationale is that “ ‘the attorney’s conduct, in effect, obliterates
the existence of the attorney-client relationship, and for this reason his
negligence should not be imputed to the client.’ ” (Ibid.) “An attorney’s
authority to bind his client does not permit him to impair or destroy the
client’s cause of action.” (Daley v. County of Butte (1964) 227 Cal.App.2d 380,
391 (Daley).)
The Supreme Court has cautioned that this exception should be applied
narrowly. (Fleming v. Gallegos (1994) 23 Cal.App.4th 68, 73.) “Positive
misconduct is found where there is a total failure on the part of counsel to
represent his client.” (Aldrich, supra, 170 Cal.App.3d at p. 739.) Put
differently, positive misconduct is established when “abandonment of the
client appears.” (Carroll, supra, 32 Cal.3d at p. 900.) “What constitutes
‘abandonment’ of the client depends on the facts in the particular action.”
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(Seacall Dev. v. Santa Monica Rent Control Bd. (1999) 73 Cal.App.4th 201,
205.)
In granting Huffman’s motion to set aside the default judgment, the
trial court implicitly determined that Murphy committed positive
misconduct, which presents a satisfactory excuse for purposes of determining
extrinsic mistake. Steichen does not contest this issue for the purpose of this
appeal, and we agree that the record supports the trial court’s implicit
finding of this element. (See Aldrich, supra, 170 Cal.App.3d at p. 738
[holding that counsel’s positive misconduct qualifies as an extrinsic mistake];
Orange Empire Nat’l Bank v. Kirk (1968) 259 Cal.App.2d 347, 353 (Orange
Empire) [“[W]here a client is unknowingly deprived of effective
representation by counsel’s failure … and the action is dismissed by reason of
the attorney’s misrepresentation, the client will not be charged with
responsibility for the misconduct…, providing the client acts with due
diligence in moving for relief after discovery of the attorney’s neglect, and the
opposing party’s rights will not be prejudiced nor suffer injustice as a result
of the granting of relief.”].)
Specifically, the record provides ample evidence that Murphy “de facto
substituted himself out of the case,” leaving his client with “representation
only in a nominal and technical sense.” (Carroll, supra, 32 Cal.3d at p. 900;
Aldrich, supra, 170 Cal.App.3d at p. 739.) As Huffman’s counsel, Murphy
failed to respond to the original complaint or the FAC, resulting in a default
judgment against his client. Further, Murphy assured Huffman more than
once that he would take care of the matter. For instance, when Murphy
received the FAC, he told Huffman, “[y]ou don’t need to do anything” but
failed to institute any action to secure relief for Huffman. (See Orange
Empire, supra, 259 Cal.App.2d at p. 354 [attorney displayed a “flagrant
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disregard for his client’s best interests” when he continued to falsely reassure
his client after the entry of default but, in actuality, did nothing].) While
Huffman did not assiduously seek out his attorney, he established a
satisfactory excuse with respect to the entry of default. (See Daley, supra,
227 Cal.App.2d at p. 392 [a client “should not be forced to act as hawklike
inquisitors of their own counsel, suspicious of every step and quick to switch
lawyers”].)
III
Diligence
“One moving in equity to set aside a default judgment must act
diligently in making his motion after he learns of the default judgment.”
(Weitz, supra, 63 Cal.2d at pp. 856–857.) The client’s own negligence in
following up and pursuing his case is independently scrutinized, even in
cases of positive misconduct on the part of the attorney. (Aldrich, supra, 170
Cal.App.3d at p. 739.)
In Weitz, the Supreme Court held that two factors determine whether
one moving in equity acted diligently upon discovery of the default. First,
whether the nonmoving party suffered prejudice by the delay and, second,
whether the moving party “in the light of the circumstances known to him
acted unreasonably in not filing the motion … earlier.” (Weitz, supra, 63
Cal.2d at p. 857.) In a case of excuse based on counsel’s positive misconduct,
the court must consider “whether the client himself acted expeditiously in
seeking relief upon discovery of his counsel’s improper conduct.” (Orange
Empire, supra, 259 Cal.App.2d at p. 354.)
Steichen urges that Benjamin v. Dalmo Manufacturing Co. (1948) 31
Cal.2d 523 (Benjamin), which held that an unexplained three-month delay
after learning of the entry of default is “unreasonable as a matter of law,”
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applies. Benjamin, which addressed the court’s authority under section 473,
subdivision (b) and not its equitable power, also stated that the defaulted
party must provide “some explanation, by affidavit or testimony, of any
extended delay” and move “within a reasonable time.” (Benjamin, at p. 529.)
Although decided in the context of the court’s statutory authority, Benjamin
provides important guidance on what amount of delay by a defaulted party is
reasonable. Critically, “[t]o the extent that the court’s equity power to grant
relief differs from its power under section 473, the equity power must be
considered narrower, not wider.” (Weitz, supra, 63 Cal.2d at p. 857.)
Huffman contends that he demonstrated sufficient diligence because he
promptly and consistently reached out to Murphy for advice and forwarded
legal documents throughout the attorney-client relationship that ended in
December 2019. Steichen asserts Huffman failed to act with diligence in
seeking relief because Huffman took no action after December 2019.
We agree with Steichen that Huffman was required to exercise
diligence in seeking relief after he stopped communicating with Murphy. The
client’s diligence stands as an independent consideration from the counsel’s
misconduct. (Aldrich, supra, 170 Cal.App.3d at p. 739.) Because it is the
client who bears the outcomes of a lawsuit and has the interests and
obligations to pursue his case to a final resolution, a counsel’s misconduct
does not forever discharge the client of such responsibility. While an
attorney’s positive misconduct may establish a satisfactory excuse with
respect to the entry of default, here, it did not excuse Huffman’s own
negligence in failing to take any action for 15 months after his text messages
with Murphy ceased.
Huffman’s delay in acting to challenge the judgment after the
abandonment was objectively unreasonable and prejudicial. Huffman
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presented no explanation for his failure to act from December 2019 to March
2021. As a party with real interests in pursuing this case, Huffman may “not
be permitted to wait as he did until more than a year after he concededly had
actual notice of such judgment before attacking it. There must be a finality
to litigation, and if a party may wait more than a year before seeking relief
from a default judgment, then why may he not wait five, ten or more years?”
(Washko v. Stewart (1941) 44 Cal.App.2d 311, 318.)
Because Huffman failed to establish his diligence after December 2019,
we conclude the trial court abused its discretion in granting Huffman relief
from the default judgment.2
DISPOSITION
The order granting the motion to set aside the default judgment is
reversed. The case is remanded to the trial court with directions to enter an
order denying the motion to set aside the default judgment and re-enter the
default judgment and writ of execution. Costs are awarded to appellant.
McCONNELL, P. J.
WE CONCUR:
AARON, J.
DATO, J.
2 Because Huffman was required to establish all three elements of the
test set forth in Rappleyea, we need not reach the issue of whether Huffman
had a meritorious defense to Steichen’s claims.
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